53rd Congress of the European Regional Science Association: "Regional Integration: Europe, the Mediterranean and the World Economy", 27-31 August 2013, Palermo, Italy

Abstract:

Many studies point to a connection between voluntary activities, social connectedness, and social capital. Social capital has been defined in various ways in social sciences, but the important common aspect of the definitions is that extensive social relations are valuable to the individual?s well-being and e.g. educational outcomes, as well as to the society as a whole. Regarding voluntary association and free-time activities, Swedish-speaking Finns stand out as more active, and having more social capital than their Finnish-speaking fellow citizens. High social capital seems also to bring about higher self-related heath benefits . This report gauges the extent and the effects of voluntary work by associations in the Åland Islands. First, a review of voluntary associations in Åland was conducted. Extensive economic data was coupled with mail surveys and interviews with key persons. Second, estimation of the volume and the monetary value of voluntary work were carried out. In addition, economy-wide effects of voluntary work were gauged through a scenario in which voluntary work was turned into municipality-financed paid work. This scenario was analysed with a dynamic CGE model of Åland. On the basis of data from around 110 voluntary associations, we estimated the yearly amount of voluntary work to 830,000 hours in Åland. Turning the voluntary work into municipality-financed paid work would incur additional costs of around 34 million euro to Åland?s municipalities. The additional cost would have to be financed by increased municipal income taxes. The increase in taxes would cause a small additional loss in welfare, when measured by equivalent variation, totalling around 36 million euro. The result is sensitive to assumptions concerning the sensitivity of labour supply to changes in net earnings. In addition, inclusion of leisure into the utility function and thus into the equivalent variation calculus would lower the welfare loss estimate

Subjects:

Personal Income and Other Nonbusiness Taxes and SubsidiesComputable General Equilibrium ModelsParticular Labor Markets: Public Policy